CORN PRICE EFFECTS ON COST OF GAIN FOR FEEDLOT CATTLE: IMPLICATIONS FOR BREAKEVEN BUDGETING

Elasticities calculated from an econometric model of cost of gain (COG) for cattle in feedlots indicate that COG is considerably less responsive to corn price changes than breakeven budgets assume. This difference in elasticities can lead to substantial errors in COG estimates obtained from budgeting. Size of error will depend upon the initial corn price and the magnitude of corn price change. Given average corn price levels and month-to-month changes, the error in budget-based net revenue projections will be about $3/head.
Cite

Citation

Anderson, John D.; Trapp, James N., CORN PRICE EFFECTS ON COST OF GAIN FOR FEEDLOT CATTLE: IMPLICATIONS FOR BREAKEVEN BUDGETING, Journal of Agricultural and Resource Economics, Volume 25, Issue 2, December 2000, Pages 669–679

Share on twitter
Share on linkedin
Share on facebook